Aug 11

How firing Steve Jobs saved Apple

I think it’s safe to say that Apple’s success story has now grown to mythic proportions.

And it deserves every bit of its myth-hood: two guys in a garage start a computer company that grows to become the most valuable company on earth. (Well, it will be soon. Move over, ExxonMobil.)

Every good legend has its heroes and villains. Playing the role of villains in this tale would be John Sculley and the Apple board for being so dumb as to actually fire Steve in 1985, setting off the company’s great decline. Steve’s return 12 years later — and subsequent astronomical success of the company — proves what a boneheaded move that was, right?

Steve’s buddy Larry Ellison sure thinks so. Commenting on HP’s firing of its CEO last year, Larry said, “The HP board just made the worst personnel decision since the idiots on the Apple board fired Steve Jobs  many years ago. That decision nearly destroyed Apple and would have if Steve hadn’t come back and saved them.”

Even John Sculley, master conspirator, now says it was a mistake to drive Steve away.

Well, not so fast, fellas. Steve’s firing is actually the reason Apple rules the world today — though admittedly, the players could not have foreseen this at the time.

Steve was pushed out because, brilliant as he was, he wasn’t all that brilliant on the business side. He was costing the company a ton of money. There was a legitimate fear that if he didn’t leave, he’d literally run the company into the ground. It was heart-wrenching, but out he went.

In exile, Steve founded NeXT Computer, Inc. NeXT was an exciting new venture for him, but it was also humbling. He didn’t have zillions of dollars to burn, so he had to court investors like Ross Perot and Canon. Financially, NeXT was a constant struggle.

This was Steve’s remedial course in Business 101. Obviously he’d learned a ton by building Apple, but NeXT taught him new levels of responsibility. Now, in a world filled with computer companies, he was going to build a new one from scratch. He’d have to stretch budgets to keep innovating through the dark times. He’d have to keep employees happy and inspired. He’d have to create new partnerships. Steve’s business skills improved immensely as a result.

With NeXT, Steve would experience something he’d never really known before: failure. At least failure in the sense that his beautiful new computer didn’t exactly set the world on fire. The press paid attention, but they wrote about a struggling NeXT, not a smashing new success. At some point, Steve would be forced to give up on the hardware and concentrate on what really made NeXT special: its software.

And so, when Apple found itself floundering, desperately in need of a new direction for the Mac OS, they bought NeXT. This gave them the technology to build Mac OS X, and it also brought Steve Jobs home — a more mature, business-savvy, fire-tested Steve Jobs than had ever walked the halls of Apple before.

If Apple hadn’t sent Steve into exile in 1985, there would have been no NeXT. Mac OS X would have been very, very different. And Steve himself would have been very, very different.

You only have to listen to Steve to appreciate how this experience changed him. In his speech at Stanford’s commencement in 2008, he said:

“I didn’t see it then, but it turned out that getting fired from Apple was the best thing that could have ever happened to me. The heaviness of being successful was replaced by the lightness of being a beginner again, less sure about everything. It freed me to enter one of the most creative periods of my life.”

Things worked out pretty well for Steve personally too. It was while at NeXT that he met his wife and started a family.

And so, a hearty thank-you to John Sculley and the Apple board for chasing away the one man who could save the company. In the process, you set the wheels in motion to re-create the company — and re-create the man.

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  • bladrnr

    Excellent analysis, Ken. It’s only through the hard times that we learn, and really appreciate the good times. What Steve has done for Apple since his return is pure genius and no one can argue that Apple is THE success story of history of business as we know it. Especially now that Apple bypassed XOM this afternoon!

  • Steve once lost a quarter billion dollars in a single year. He said it was very character building.

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  • I love this Ken. Steve also mentioned about connecting the dots backwards in his Stanford commencement speech, and it’s definitely interesting to note how what he likely considered ‘failure’ at one point turned out to grow him and make him stronger and evolve into what he is today. Something for entrepreneurs to ponder about during the ups and downs. Thank you for sharing this insight! -Vince

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  • Gary Bennett

    I agree with this completely. As one who followed events at the time, I was relieved when he was fired. The list of his misjudgments, and at time fiascos, at that time was long: the Apple III, the Apple IIc, the LISA, and the underpowered original Macintosh. He seemed at war with the engine that was driving the company’s success and growth, the Apple II; and his obsession with “closing the box” from consumer control at the time greatly undermined the freshness of the appeal of the Apple II — and drove millions of customers to the IBM PC, which copied many of that computer’s winning ideas. The corporate structure was also in chaos. The Steve Jobs who came back still had his eccentricities, but was, as you say, a much more business-savvy boss.

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